How can IR professionals use their websites to engage effectively with retail investors? Lloyd Bevan asks IROs for their reactions to our research
Lloyd Bevan
Retail investor communication has always been a challenge for IR. IROs have traditionally paid greater attention to institutional investors, which are fewer in number and wield considerably more clout. Retail investors are more disparate, and individual relationships yield lower rewards.
The IR Magazine Global Investor Relations Practice Report 2021 shows just over a quarter of shares are held by individuals. But this can include shares held by a company’s individual founding family members – reporting by IR Magazine in 2020 put the number of non-family retail shareholders at just 14 percent. Recent reports have the proportion of the stock market held by individual shareholders ranging between 19 percent and 26 percent.
On the other hand, institutional investor ownership is consistent. In the last two years, reports by IR Magazine show six in 10 shares globally are held by investment institutions. Among North American companies, this rises to 69 percent.
This inevitably leads to IROs focusing on their relationship with the institutional investment community. While institutional engagement is conducted through meetings, events and the cultivation of interpersonal relationships, retail investor engagement largely relies on wider communication media. Websites in particular are a key means for IR to address the retail community and get the company story out.
IR Magazine‘s latest report on IR Websites, featured in this issue, shows that 62 percent of IR professionals find IR web pages to be an effective tool in communicating with retail investors, compared with 13 percent who find them ineffective.
General reasons given for their effectiveness in retail communication focus on the ease of reporting on a website, with the ability to provide large amounts of information in a clear and concise way.
Andrea James, Axon Enterprise
Access all areas German multinational chemical company BASF, winner of the best IR website trophy at this year’s IR Magazine Awards – Europe, has more than 800,000 individual shareholders. Dr Stefanie Wettberg, senior vice president of IR at BASF, explains that ‘around 40 percent of our share capital is held by private investors. The best way to inform this large group is via our IR website. It is the easiest and fastest way to make all relevant information broadly accessible.’
Having such a large retail investor base highlights the need for readily accessible information on IR web pages. ‘We offer comprehensive information and a wide range of services, from Excel downloads, online reports and factbooks to newsletters via email and much more,’ Wettberg says. ‘We also include links to other sections of basf.com with further information – for example, on our sustainability activities. This topic is of particular interest to our retail investors.’
Julia Stötzel is founder of Junicorn Consulting and was short-listed for the rising star trophy at the IR Magazine Awards – Europe 2022. She considers IR websites ‘not only your business card to the investor world but also the one place of truth. Whether the communication through the website is effective depends for me on whether information is complete, up to date, consistent and well structured.’
Andrea James, senior vice president of corporate strategy and investor relations at Arizona-based large cap Axon Enterprise, says that ‘while a company our size can’t interact one-on-one with every shareholder, we aim to be as communicative as possible by having our information easily accessible and digestible. It’s important for us to continuously evaluate our IR site to ensure optimal functionality, and we have heard positive feedback since directing more attention to this element of our IR strategy.’
Winnie Lei, Summit Ascent Holdings
‘Informative entertainment’ Adapting website content to address the needs of retail investors is important in a changing investment landscape. This issue’s IR Websites report shows that 47 percent of companies have made changes to their website in the past two years to make them more inclusive of retail investors.
James explains the type of changes made: ‘We recently redesigned our IR website to elevate the browsing experience by minimizing the number of scrolls and clicks needed to access critical information and ensuring compliance with the Americans with Disabilities Act.
‘Additionally, over the last few years we’ve enhanced our published materials so that our website is a one-stop shop for all shareholder needs, regardless of holding size.’
Hong Kong-based Summit Ascent Holdings is updating its website to meet retail investor needs ‘by including fewer financials-related topics and offering updates on business operations on the corporate website’.
Winnie Lei, senior director of investor relations at Summit, says this is part of an integrated outreach program for retail investors that also includes communicating through retail shareholders’ favorite trading platforms, media stock commentators and retail investor forums.
Stötzel believes one way of making content more engaging for retail investors is ‘informative entertainment’. Addressing the interests of the developing retail shareholder market, she says ‘working with audio and video content is effective to informatively entertain – specifically a younger audience, which has an increasingly short attention span.
‘Younger investors tend not to be interested in reading the 200-page report but instead want to watch the five-minute summary video. In my view, the way IR is done in the future – specifically for retail investors – will change to cater more for their needs.’
Social climbing One method of communication becoming increasingly more important for engaging the retail investment community is the use of social media. While BASF says its IR website ‘continues to be the central point of information about BASF and the BASF share’, it has complemented this with use of social media platforms such as LinkedIn and Twitter, to the point where it has integrated its Twitter feed into its IR website landing page.
Stefanie Wettberg, BASF
For Stötzel, social media provides a greater balance for communicating with retail investors than can be achieved solely through traditional methods.
‘Using social media, video and audio content while still maintaining an informative base with the traditional IR publications will be a balance to strike,’ she states.
‘Websites are always a one-way communication from the company to the market. Social media, on the other hand, is a great tool for engagement. You will get real-time valuable feedback and can directly respond to questions and concerns.’
While IR websites will remain central to retail investor engagement, social media provides the opportunity for a level of interaction with individual investors that was previously achievable only with institutional investors. Having this ability to receive feedback will ultimately lead to greater opportunities for IR in the retail investment space.
‘In the past 10 years, the use of digital technologies in IR has increased considerably,’ Wettberg concludes. ‘Today, companies can provide information for everyone, everywhere and at the same time.
‘We make use of these opportunities. The IR website continues to play a leading role and social media channels are a valuable addition, particularly for younger shareholders.’
